10 Lessons from The Intelligent Investor by Benjamin Graham

The Intelligent Investor by Benjamin Graham is one of the greatest investing resources of all time.

It’s helped millions of investors learn the best ways to build long term wealth and achieve financial freedom.

Here are 10 priceless lessons on investing from The Intelligent Investor.

Invest in Companies, Not Stock Tickers

When investing, always focus on understanding the fundamentals of the assets you invest in.

Don’t simply buy and sell based on market trends and sentiment.

Take the time to research the company’s:

• Financial health

• Competitive advantages

• Management team

This approach helps you make informed decisions about which companies are worthy of your investment.

Investing in the stock market isn’t about numbers.

It’s about business.

Invest For The Long Term

Investing isn’t about making quick gains. It’s about building wealth over time.

Adopt a long-term investment strategy, like dollar cost averaging, and resist the temptation to engage in frequent trading.

By holding onto quality investments for the long term, you give them a better chance to grow and compound your returns.

Statistics show that the less investors touch their portfolios, the higher their average returns tend to be.

Many investors will agree that time in the market, will beat timing the market.

Margin of Safety is Key

A margin of safety refers to buying an investment at a price below its fair value.

This provides a cushion against potential losses and protects you from downside risks.

When you invest with a margin of safety, you are being cautious and conservative, ensuring that the odds are in your favour.

When everyone is rushing to buy an asset, it’s not always a good move.

As Warren Buffett says, be fearful when others are greedy, and be greedy when others are fearful.

Diversification is Important

Diversifying your portfolio means spreading your investments across different asset classes, like:

• Stocks

• ETFs

• Real Estate

and also by sector, like:

• Banking

• Healthcare

• Technology

By diversifying, you reduce your overall investment risk.

If one sector or asset class underperforms, the others may still perform well, mitigating potential losses.

Don’t put all your eggs into one basket.

You can never be certain where a particular investment may be headed, so insure yourself with a diversified portfolio.

Don’t Try to Time The Market

Timing the market means trying to predict the perfect moment to buy or sell investments based on short-term market trends.

Trying to time the market is a big investing mistake, and will always be a losing game, so it’s best to just avoid playing.

Instead, focus on investing into quality companies and funds with the intent to hold long-term.

By staying invested, you can benefit from the compounding growth of your investments over time.

Warren Buffett once said: ‘Investing transfers money from the active to the patient.’

Make sure you’re in the latter part of this scenario.

Ignore Market Noise

Financial media and analysts often create noise that can distract investors from their long-term investment goals.

It’s important you learn to filter out the noise and negative headlines.

Stick to your investment strategy and remain focused on the long-term outlook for your investments.

In most cases, their goals aren’t in alignment with yours, and deliberately spread lies and investing myths to push an agenda.

Don’t get influenced by potential fear mongering and maintain conviction throughout.

Be Patient With Your Investments

Successful investing requires patience and discipline.

Avoid making impulsive investment decisions based on fear or greed.

Trust in your research and give your investments time to perform.

Remember that investing is a long-term commitment, and short-term market fluctuations shouldn’t dictate your actions.

The worst mistakes I’ve ever made came from making impulse decisions, which rarely turned out well.

Once you’re able to control your emotions, you’ll have a much higher chance of succeeding, and that brings us nicely onto the next point.

Emotions Will Cloud Your Judgement

Emotions such as fear and greed can cloud your judgment as an investor.

Fear may lead to panic selling during market downturns, while greed may push you to chase speculative investments without proper due diligence.

Develop the ability to make rational investment decisions based on principles and objective analysis, rather than being swayed by temporary emotions.

There’s nothing worse than panicking, and buying at all time highs, or selling at all time lows.

Like I said, the ones with the longest time horizon will come out on top.

Understand Your Circle of Competence

Invest in companies and industries that you understand well.

This knowledge gives you an advantage and builds confidence in your investments.

If you are unfamiliar with a particular industry or investment, take the time to research and educate yourself before making any decisions.

Remember, confidence in your investments comes from knowledge and understanding.

And having confidence in your investments is the only way you’ll have the emotional intelligence to hold during periods of extreme volatility.

Continuously Learn and Improve

The world of investing is ever-evolving.

The best investors are lifelong learners who continuously seek to improve their skills and knowledge.

Stay open to new ideas, strategies, and market trends.

• Read finance books

• Follow reputable financial websites

• Attend investment seminars or webinars

To expand your understanding of the investment landscape.

Remember, becoming a better investor takes time and effort.

Thanks for reading! Be sure to subscribe (it’s free!) for more financial wisdom every week.